Tuesday 1 December 2009 15.55 EST
First published on Tuesday 1 December 2009 15.55 EST

Cadbury intends to use its ethical credentials as an important plank of its defence against the £10bn hostile bid from Kraft, the confectioner's chief executive said today.

Todd Stitzer said he intended to play up the heritage of the brand and its Fairtrade links as he appealed to shareholders to throw out the hostile bid. He also expressed a preference for US chocolate-maker Hershey as a potential buyer if a deal was eventually done.

Stitzer is assembling the chocolate company's defence document, which will be published before Christmas. "It's a special brand. We are unique in our markets," he said. "Consumers care about sustainability."

It is a high-risk strategy as shareholders' concerns usually focus on the financial merits of any deal. They rarely put a price on intangible factors such as culture and environmental good works.

But Stitzer insists the confectioner's strong ethical code is of significant value to both investors and consumers. "We are a unique company with a unique culture and there is a value aspect to keeping that intact in a thoughtful way," he said. "We can deliver value for shareholders as an independent standalone company"

The prospect of Cadbury being swallowed by the American food colossus has raised concerns that its particular form of "principled capitalism" – rooted in the Quaker faith of the eponymous founding family – will be destroyed and trade unions fear that jobs will be lost.

The Cadbury boss said he intended to bang the drum for its culture in an attempt to persuade long-term shareholders to stick with his management and strategy.

Frenzy

He recognised that ethical issues would not impress the short-term investors, such as hedge funds, which have piled into Cadbury shares in the hope of making a quick profit, but said: "The short-term element of the register is only about 15%, which is particularly low for this kind of circumstance," he said today. "We are in very close communication with our large long-term shareholders."

The Cadbury share price has jumped more than 40% since Kraft showed its hand in September and with rival chocolate groups Hershey, Ferrero and Nestlé all circling, a feeding frenzy has broken out that has the potential to put a wrecking ball through 200 years of good works. The Cadbury boss said the market had "finally woken up to the value we have created".

Stitzer said ethical commitments such as the £45m Cadbury Cocoa Partnership, which enabled Dairy Milk to become the first mainstream Fairtrade chocolate bar in July, were part of the company's "DNA" .

Stitzer, whose business credo is guided by his previous career as a mergers and acquisitions lawyer as well his strong Christian faith, has a fight on his hands to convince the City that Cadbury, which also makes Trident gum and Halls throat sweets, has a bright future. However, he admitted that there was a price at which Cadbury was for sale, and ethics would come second: "We will continue to execute our strategy as an independent standalone company unless someone comes along with a compelling offer, and I mean compelling."

If a deal is to be done Stitzer points to a preference for Hershey, which like Cadbury enjoys a reputation as a paternalistic employer and is thought to be working on a "friendly" bid. "There are clear similarities between the Cadbury culture and Hershey," said Stitzer. "Both were founded by men of vision and principles."

Milton Hershey was inspired by Cadbury's Bournville village when building his Pennsylvanian company town – which he named Hershey. With no heirs, he ploughed his fortune into the Milton Hershey School for underprivileged children, which is overseen by the Hershey trust that holds a controlling stake in the confectioner.

"Someone of a consistent culture offering compelling value [to shareholders] is a better solution than someone offering compelling value and an inconsistent culture," said Stitzer, but added: "We have no offer from Hershey and an uncompelling one from Kraft."

Award-winning

Tonight, the company won the society and environment category at Management Today's awards for Britain's most admired companies and Stitzer said the switch to Fairtrade had increased sales of Dairy Milk, with 40m bars sold since the first ones rolled off the Bournville production lines in June. "It has absolutely been the right thing to do for our brand," he said. "If our brand does well our share-owners do well."

He said Cadbury had been inundated with letters from consumers keen to show their support as the British institution fights for its independence. However, despite this pressure, the Bournville-based company will not play the "British card" as part of its defence.

Stitzer, an American who along with his wife became a British citizen two years ago, says Cadbury has a "unique British heritage" but that the group, which is expected to have sales of £6bn this year, is now a "great global company".

The Cadbury defence document will highlight established positions in fast-growing markets such as India, as well as the potential to beat current internal sales and margin guidance.

The clock is now ticking on Kraft's cash and stock offer, with its offer document expected to land this week, ahead of next Monday's deadline. Once dispatched, the Toblerone and Ritz cracker maker has 60 days to persuade shareholders to accept it. Cadbury then has a fortnight to respond, and may use a trading update pencilled in for 15 or 16 December as a platform to retaliate.

The shares closed unchanged at 806p.

Cadbury facts

• Cadbury dates back to 1824, when John Cadbury opened a shop in Birmingham, selling tea and cocoa as an alternative to alcohol

• Sales at Cadbury are expected to reach £6bn this year. In 2008 it had a 10.5% share of the global confectionery market

• Cadbury has sold 40m Fairtrade Dairy Milk bars since it made the switch in July. The move has quadrupled global sales of Fairtrade cocoa

• Kraft is the world's second-largest food group, with annual sales of $42bn. It owns nine brands with sales of more than $1bn, including Milka chocolate, Oreo cookies and Philadephia cheese.

• Kraft has gone hostile in its $10bn bid to win control of Cadbury with shareholders due to receive the offer document any day

• Todd Stitzer, left, Cadbury's 57-year-old chief executive, eats chocolate every day and rates the Crunchie as his favourite bar